Washington Dairygrams - June 2012

As printed in our June 2012 issue...

THE FARM BILL WAS INTRODUCED for consideration on the Senate floor in late May. Debate was expected to begin in early June. It has been reported that Senate Ag Chairman, Debbie Stabenow (D-Mich.), believes she has the 60 votes needed to end debate and move the bill to passage.

MEANWHILE, THE HOUSE AG COMMITTEE could mark up the farm bill in mid-June. The Dairy Security Act is the foundation for the dairy title.

JUNE-TO-DECEMBER CLASS III FUTURES rose nearly $1 during the last three weeks of May. Stepped-up exports, moderated product inventories, and slowed U.S. milk growth all contributed to price upswing. CME block cheese rose one dime, to $1.60 per pound, during that same time.

DESPITE THE U.S. UPTICK, global dairy prices remain off 20 to 30 percent compared to last spring as strong world milk production softens markets.

A $17.15, ALL-MILK PRICE is the most recent estimate for the remainder of 2012. The forecast is down $1.55 since the beginning of the year. USDA also released its first 2013 estimate which has a $17.75 midpoint.

APRIL PRODUCTION ROSE 3.2 percent nationally when compared to last year. However, output only grew 0.4 percent when compared to March.

ALL THE TOP 23 DAIRY STATES WERE UP except for Pennsylvania which was the lone state that reduced flow, now for two straight months. California rose 3.1 percent, Wisconsin (+3.5), Idaho (+2.9), and New York (+3.6).

THE FULL WEIGHT of production bases and herd removals should be reflected in California’s May data. Still the Golden State’s April milk growth was nearly cut in half when compared to January through March.

THERE WAS A 15 PERCENT JUMP in the cost of production for California dairy producers last year when compared to 2010. Most of the added costs were attributed to feed prices, reports the state’s ag department.

PROFITS RANGED FROM $1.61 TO $3.02 per cwt. last year for Arizona, California (excluding the Chino Valley), Idaho, New Mexico, Oregon, the Texas Panhandle, and Washington, reports the Frazer accounting firm.

DAIRY EXPORTS REACHED A RECORD $482 MILLION in March, up 16 percent from the same time last year. Cheese exports also posted new highs.

BRIEFLY: Corn remained well ahead of schedule with 92 percent emerged on May 27 compared to the 69 percent, five-year average. Soybeans followed suit with 89 percent planted compared to the 61 percent norm. Interest rates remain at historic lows with ag operating and equipment loans averaging between 3.5 and 4.3 percent. One of Europe’s largest dairy cooperatives, Arla Foods, announced plans to merge with co-ops in Great Britain (Milk Link) and Germany (Milch-Union Hocheifel). The Greek yogurt boom continues as sales are expected to pass the $2-billion mark by year’s end. That’s up from $35 million just five years ago.